Governors hold trigger for West’s energy boom

ALBUQUERQUE – Petroleum producers in southeastern New Mexico are on track to pump 80 million barrels of oil this year – numbers that haven’t been seen since the 1970s.

In Texas and North Dakota, the oilfields are booming. Companies are exploring possible shale plays in more pockets around the West, and there are no signs that Wyoming stands to lose its position as the nation’s top coal producer.

Federal projections released this week by the U.S. Energy Information Administration suggest the next three decades will see similar flurries of domestic energy development as technology improves and pressures mount to reduce America’s reliance on Mideast oil, and the West will be a player.

The “energy breadbasket” of the nation is how Utah Gov. Gary Herbert describes it.

With its large swaths of public land and enormous caches of oil, natural gas and solar, wind and geothermal resources, Herbert, chairman of the Western Governors Association, said there’s no reason the region shouldn’t be a model for how to balance domestic energy production.

“The time for half-measures is past,” he said in a statement. “We need an energy policy big enough to satisfy the world’s growing appetite for energy.”

He’s behind an effort to develop a 10-year energy plan for the 19 states that belong to the association. Governors from many of the states kicked off discussions during a meeting last weekend in Arizona.

The governors are expected to have a draft of the plan ready by next summer, said Rich Halvey, a program director with the governors association.

“I think for the most part, there’s a sense that we should be moving as much as we can toward North American energy security,” he said.

According to the Energy Information Administration’s latest projections, energy production in the U.S. will outpace energy consumption by 2040. The reasons include higher energy prices, better technology for tapping oil and gas reserves, more efficient vehicles and electronic gadgets, and state and federal standards.

The increase in production is expected to result in the U.S. becoming a natural gas exporter by 2020. Domestic oil production is also expected to top out around 7.5 million barrels a day by 2019.

Imports represented nearly one-fifth of total U.S. energy consumption in 2011. That stood at 30 percent just seven years ago and is projected to be less than 10 percent by 2040.

However, EIA Administrator Adam Sieminski said becoming more self-sufficient still will not insulate the U.S. from changes in the global market.

The high price of oil is what has been driving drilling activity from North Dakota south to New Mexico and West Texas. In the desert surrounding Hobbs, N.M., the drilling rigs are busy, unemployment has dipped below 4 percent, and housing is hard to come by thanks to the influx of oilfield workers.

For New Mexico Gov. Susana Martinez, that’s not a bad problem to have.

Energy development is the backbone of the state’s economy. Current estimates call for energy revenues to be about 16 percent of the state’s main budget account.

“Not only will development help local and state budgets through royalties, leases and permits, but it also allows the country to become energy independent,” Martinez said.

As the Western governors craft their energy plan, Halvey said everything will be on the table – from traditional fossil fuels to renewable energy sources. They will also be considering challenges to development, including transportation via pipelines and transmission lines.

“What the governors have said is not that we want to pick a winner or a loser but that we want to make sure that the rules are such that everybody can play with a degree of fairness,” he said.